The Loan Surety Agreement is a critical legal instrument in Nigerian financial transactions, commonly used when a lender requires additional security beyond the borrower's own capacity or assets. This document is essential when a third party (the surety) agrees to guarantee a loan, making them legally responsible for the debt if the primary borrower defaults. The agreement must comply with Nigerian contract law, the Money Lenders Act, and other relevant financial regulations. It typically includes detailed terms about the guarantee's scope, the surety's obligations, enforcement procedures, and the specific circumstances that trigger the surety's liability. This document is particularly important in commercial lending, property financing, and business loans where additional security is required to mitigate the lender's risk.
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1. Parties: Identifies and defines the Lender, Borrower, and Surety with their full legal names and addresses
2. Background: Explains the context of the loan agreement between Lender and Borrower, and the Surety's willingness to guarantee the loan
3. Definitions and Interpretation: Defines key terms used in the agreement and sets out rules for interpreting the document
4. Surety's Obligations: Details the extent and nature of the surety's guarantee, including the amount guaranteed and the scope of liability
5. Primary Nature of Obligations: Establishes that the surety's obligations are primary and independent, not just secondary to the borrower's obligations
6. Representations and Warranties: Statements of fact and assurances given by the Surety regarding their capacity and authority to enter into the agreement
7. Duration and Extent of Liability: Specifies how long the surety remains liable and the maximum extent of their liability
8. Enforcement and Recovery: Sets out the circumstances under which the guarantee can be enforced and the recovery process
9. Indemnity: Surety's obligation to indemnify the lender against losses related to the borrower's default
10. Continuing Security: Confirms that the guarantee remains in force until all secured obligations are fully discharged
11. Payments and Interest: Details about payment obligations, including interest calculations and payment methods
12. Governing Law and Jurisdiction: Specifies Nigerian law as governing law and sets out jurisdiction for dispute resolution
1. Multiple Sureties: Required when there is more than one surety, defining joint and several liability
2. Collateral Security: Used when additional security is provided alongside the personal guarantee
3. Assignment and Transfer: Included when parties want to allow for the possibility of transferring rights under the agreement
4. Force Majeure: Optional clause dealing with unforeseen circumstances affecting performance
5. Alternative Dispute Resolution: Optional provisions for mediation or arbitration before court proceedings
6. Cross-Default: Optional provision linking this guarantee to other financial agreements
7. Financial Covenants: Used when specific financial conditions are imposed on the surety
8. Language Declaration: Required when any party is not fluent in English, confirming the agreement has been explained in their native language
1. Schedule 1 - Principal Loan Agreement: Copy or key terms of the main loan agreement being guaranteed
2. Schedule 2 - Secured Obligations: Detailed list of all obligations covered by the guarantee
3. Schedule 3 - Payment Schedule: Details of payment dates, amounts, and interest calculations
4. Schedule 4 - Surety's Assets Declaration: Statement of the surety's assets and financial position
5. Appendix A - Required Notices: Forms and formats for various notices under the agreement
6. Appendix B - Enforcement Procedures: Detailed procedures for enforcing the guarantee
Relevant legal definitions
Clauses
Relevant Industries
Banking
Financial Services
Microfinance
Real Estate
Commercial Lending
Corporate Finance
Small and Medium Enterprises
Construction
Agriculture
Manufacturing
Relevant Teams
Legal
Credit Risk
Compliance
Corporate Banking
Retail Banking
Operations
Documentation
Recovery
Due Diligence
Finance
Relevant Roles
Legal Counsel
Credit Manager
Loan Officer
Risk Manager
Compliance Officer
Banking Manager
Financial Director
Contract Administrator
Corporate Secretary
Chief Financial Officer
Credit Risk Analyst
Recovery Officer
Relationship Manager
Due Diligence Officer
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